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Reassessing your retirement plan after the loss of a spouse

The death of a spouse may dramatically change your financial situation. So, as soon as you are comfortable, it is important to assess your financial affairs. There is no set formula for how or when this should happen. But you may want to assess all of your accounts by the time your next mortgage payment is due.

Get Your Arms Around Your Financial Affairs

If you are like most Americans, then your mortgage payment is due right around the first of the month. And if you’re up to it, this is probably a good time to make sense of your financial affairs. Creating a set of basic financial statements will help.

You don’t need anything elaborate. Just a tally of how much money comes in and goes out every month and a summary of what you own and what you owe should suffice. You should be able to get your arms around all of this by downloading the last few months’ worth of bank statements.

It’s important to understand the value of your home and other real estate you own. You’ll want to understand the value of any investment accounts you held jointly with your late spouse or that he or she may have held separately.

You’ll also want a good accounting of your debts. These include any mortgage loans on the real estate you own and any outstanding balances on credit cards, auto loans, or other personal debt.

Understanding each of these balances will give you a good starting point for determining how your retirement plan may change. This is because surpluses (more income over expenses or more assets over liabilities) may mean more money for retirement. Deficits (more expenses than income or more liabilities than assets) could mean the opposite.

Are you Entitled to any Benefits?

After you get a handle on your current financial condition and make sure that nothing goes unpaid or becomes overdue, you should determine what benefits you’re entitled to as a result of your spouse’s passing.

Contact the Social Security Administration and provide it the information it needs to establish your survivor benefits. You should do this even if your spouse was not yet receiving Social Security. If your spouse was a veteran, do the same with the VA.

Reach out to any life insurance companies that have policies in your late spouse’s name. Contact his or her employer to see what life insurance benefits they might have had in place. And find out what health insurance benefits may still be available to you through your late spouse’s company plan.

Each of these will help you better understand what resources may be available to help fund your retirement.

Consider Consolidating Retirement Accounts

If you are the sole beneficiary of your late spouse’s retirement accounts, then you are allowed to transfer those assets into your own IRA and treat them as if they had always been your own. You can transfer any Roth IRAs into a single Roth IRA and any Traditional IRAs or employer-sponsored retirement plans into one Traditional IRA.

Employer-sponsored retirement plans include the one at your late spouse’s most recent employer as well as any of his or her previous employers. If there are assets left in any of those plans, they can all be consolidated in your new or existing IRA.

Consolidating accounts held at different financial institutions or employers may make it more manageable to keep track of your retirement assets. This may ease some of the hardship you feel right after losing your spouse. It may also give you a clear picture of the asset base you have to work with as you reassess your retirement plan.

Reassessing Your Retirement Plan

Being alone or raising children on your own might create new expenses. So, you may have to adjust your budget. But at this point you should be in a position to understand what your ongoing expenses will be.

Understanding what your potential survivor benefits are will help you make more informed income decisions. And consolidating retirement assets may provide the clarity you need to make portfolio changes that are in line with your future consumption goals and individual risk tolerances.

Just don’t make any major financial decisions without planning. There are many things to do after the loss of a spouse. Getting assets properly titled (into a beneficiary's name or the name of a trust created during earlier estate planning) is one of them.

Making subtle adjustments may make sense in the weeks or months after your spouse’s passing. But his or her death may not necessitate making significant shifts in your family’s long-term financial strategy.

Now is the time for careful review and thoughtful planning, not snap decisions. And we are available to answer questions about your current investment holdings and how they may help you with that planning. Call us at (800) 235-8396.


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